Why I Want to End Free Initial Consultations

Craig W. Smalley, EA
Founder/CEO
CWSEAPA PLLC
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More than once throughout my career, I’ve asked myself: Why do accountants offer free initial consultations?

The obvious answer? We’re looking to get business from them. It’s actually an extremely common practice.

However, in recent years, I have noticed some potential clients go to great lengths to get as much free advice as possible. Then, you never see them again. 

Recently, I had an encounter with an attorney. He was converting his LLC, which was currently taxed as an S corporation, to another LLC where he would initially be the sole member. He would then become a 50 percent owner; this number would later drop to just over 33 percent.

I offered him a free, one-hour telephone consultation because I knew I would have follow-up questions, and an email discussion would be both time consuming and cumbersome. Furthermore, tone and everything else can get lost in email.

However, he declined to speak to me on the phone and opted for email instead. I reluctantly agreed.

The first email came; it was two pages of questions. These prompted further queries from me, and a flurry of emails ensued. I spent half my day with this gentleman, and it culminated with him sending me his Operating Agreement and tax returns. 

However, when I finally had enough information to give advice, his last email stated he would “let his current accountant know.” The lengthy exchange with him had taken me away from other billable work and made me think: Why did I waste my time with this nonsense?

When I first started out, I was very lucky to have an excellent mentor. His philosophy was: “Get them in, sell them and convert them to clients.” In order to “sell” the potential client, he would say, “You either dazzle them with brilliance or baffle them with BS.” 

So, if we go by that theory, why didn’t this attorney just ask his current accountant all of these questions?  Why was I involved? Even if he was just looking for a second opinion (he liked the advice I gave him, by the way), why not just fire his accountant and hire me?

It boils down to this. When someone doesn’t have anything invested, sometimes, they don’t take you seriously. For example, I can charge a client a $5,000 retainer, and they’ll listen closely to what I say.  However, a person, say, a friend, who receives the counsel for free will often take my advice with a grain of salt. The problem is, later, I have to get them out of trouble.

What is the difference?  Advice is worth what you pay for it, or, at least, that is what a lot of people think.  If I counsel a friend for free, it won’t be respected because they are out nothing. However, my client hangs on every word because he is paying me by the hour.

With that in mind, let’s put the shoe on the other foot. Had I gone to the same attorney for a consultation, I would have been charged $200 to $400 for our first meeting. So, how are we different? In this situation, the client is taking my advice to his current accountant, who had no knowledge of the tax issues, and that individual will learn a free lesson. 

What I am toying around with is the idea of charging a $200 initial consultation fee. The amount will be credited to a potential client who is converted to an actual one.

My reasons are simple. There are a lot of cases where I am put in situations where someone has an intricate tax situation. I am asked to review returns, produce a tax analysis and spend a lot of time with the client. Then, they decide to go somewhere else, because I am either too expensive, or they don’t like my advice.

By charging for my time, I’ll ensure I don’t work for free and give up other billable hours. What do you guys think?

About Craig W. Smalley, EA

Craig Smalley

Craig W. Smalley, MST, EA, has been in practice since 1994. He has been admitted to practice before the IRS as an enrolled agent and has a master's in taxation. He is well-versed in US tax law and US Tax Court cases. He specializes in taxation, entity structuring and restructuring, corporations, partnerships, and individual taxation, as well as representation before the IRS regarding negotiations, audits, and appeals. In his many years of practice, he has been exposed to a variety of businesses and has an excellent knowledge of most industries. He is the CEO and co-founder of CWSEAPA PLLC and Tax Crisis Center LLC; both business have locations in Florida, Delaware, and Nevada. Craig is the current Google small business accounting advisor for the Google Small Business Community. He is a contributor to AccountingWEB and Accounting Today, and has had 12 books published on various topics in taxation. His articles have also been featured in the Chicago Tribune, New York Times, Yahoo Finance, Nasdaq, and several other newspapers, periodicals, and magazines. He has been interviewed and been a featured guest on many radio shows and podcasts. Finally, he is the co-host of Tax Avoidance is Legal, which is a nationally broadcast weekly Internet radio show.

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Dec 5th 2018 18:24

On the bookkeeping side, there is a current trend to skip free consultations and instead charge for a review or Needs Analysis. This way, you get to see the QB or Xero file, and know see for yourself what the issues are, outline what needs to be done to correct them, look like an expert, and hope they want to sign up with you. It also provides a better understanding of what ongoing services will involve, so you can price them accurately. No more freebies! Get paid for the initial review, instead of giving it away for free!

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